In a global economy, investigative due diligence is like a cop walking a beat: You need to develop trustworthy sources, and those sources are different in each circumstance and every country. i-fact@nalysis has been cultivating these sources around the globe for 4 decades.

Case Studies

Case Study: Global High Tech Co. utilized as a pawn in $100 million plus fraud

The High Tech company requested a investigative due diligence be conducted on a number of client company employees, one non-employee and multiple companies the client had contracted to provide support services in a foreign country. An internal audit had raised several Ref Flags involving irregularities relating to multimillion dollar service contracts. A senior investigations manager was assigned to oversee the team of research analysts and intelligence specialists who immediately began the process of collecting and culling through information in the foreign country. The non-employee was identified as an employee of the foreign government with procurement duties. The research provided evidence the non-employee (Gov’t employee) lived in a million dollar mansion, owned expensive automobiles and had other real estate holdings.

After reviewing all of the data collected, the investigations manager requested and received authorization from the client to conduct research in the U.S. on the non-employee to identify assets, corporate affiliations and other evidence that would assist in the investigation. The research located real estate holdings and uncovered documentation the non-employee had a significant shareholding in a publicly traded U.S. company. The research in the foreign country also provided evidence the non-employee had incorporated a company and an affiliation with one of the client’s vendor companies. The investigative due diligence provided sufficient evidence the client’s employees and the company had been utilized as pawns in a scheme to defraud the foreign government of tens of millions of dollars. The client reported their finding to the foreign government, which in turn launched a criminal investigation. The government employee was arrested, convicted and sentenced to prison. The client reimbursed the foreign government tens of millions of dollars; however, the investigative due diligence had also proven that the client and its employees had not committed any criminal offence.

Case Study: Multi National High Tech company walks away from $150 million equipment sale

The client was in negotiations with an investment group headquartered in a Latin American country for the sale of over $100 million in equipment at a significantly discounted price point. Note: This was not an attempt to obtain the equipment without payment. The investment group offered to pay a significant portion of the sale price at the time a contract was signed and the remainder upon delivery. The initial due diligence investigation uncovered evidence the investment group’s corporate structure was a complex maze of shell companies established in several Latin American countries.

The managing director assembled a research and intelligence team that worked around the clock while the client continued to negotiate with the investment group. The research team collected information from government repositories and proprietary databases and compiled a relationship chart identifying the various shell companies, their principals and the inter-locking business relationships. In addition, intelligence analysts provided information from local senior level sources indicating the actual principals of the investment group were not disclosed to the client. Our sources indicated one principal was suspected of having ties to terrorist groups operating in Latin America. i-fact@nalysis’s managing director overseeing the investigative due diligence informed the client there was enough evidence to suggest the proceeds from the resale of the equipment could be utilized to fund terrorist organizations. The client terminated all negotiations with the investment group.

Case Study: Red Flag Screening leads to Enhanced Due Diligence

As part of their overall investment strategy a large U.S. based financial institution entered into a multimillion dollar public construction loan project. The general contractor of the project hired multiple construction firms to work on the project and after a year of progress the general contractor filed for bankruptcy and defaulted on the multimillion dollar loan.

An i-fact@nalysis’s managing director received authorization to conduct a postmortem due diligence on the general contractor. A research team determined several of the construction companies hired by the general contractor were shell companies operated by individuals with questionable backgrounds. The postmortem enhanced-due diligence produced sufficient evidence indicating the financial institution was the victim of an elaborate fraud. Law enforcement authorities were presented with the results of the enhanced due diligence and were successful in prosecuting three individuals. The financial institution was successful in recovering a portion of the construction project loan.

A U.S. based banking institution began negotiations regarding an investment opportunity with a company headquartered in a Middle Eastern country. During the initial meetings the Middle Eastern company reported the company and its principals had no government ownership and/or affiliations. A Level II Risk Assessment was initiated and a team of research analysts aided by intelligence specialists’ located in-country turned up evidence that a business relationship existed between the Middle Eastern company and a senior government official. The research and on-the-ground inquiries conducted through high level sources provided insight into the business relationship between the Middle Eastern company and the government official. Aided with the intelligence research analysts and the managing director were successful in obtaining documentation the business relationship existed between the parties. The banking institution passed on the deal and terminated any further negotiations.

Case Study: Red Flag Screening leads to Enhanced Due Diligence

As part of their overall investment strategy a large U.S. based financial institution entered into a multimillion dollar public construction loan project. The general contractor of the project hired multiple construction firms to work on the project and after a year of progress the general contractor filed for bankruptcy and defaulted on the multimillion dollar loan.

An i-fact@nalysis’s managing director received authorization to conduct a postmortem due diligence on the general contractor. A research team determined several of the construction companies hired by the general contractor were shell companies operated by individuals with questionable backgrounds. The postmortem enhanced-due diligence produced sufficient evidence indicating the financial institution was the victim of an elaborate fraud. Law enforcement authorities were presented with the results of the enhanced due diligence and were successful in prosecuting three individuals. The financial institution was successful in recovering a portion of the construction project loan.

A U.S. based banking institution began negotiations regarding an investment opportunity with a company headquartered in a Middle Eastern country. During the initial meetings the Middle Eastern company reported the company and its principals had no government ownership and/or affiliations. A Level II Risk Assessment was initiated and a team of research analysts aided by intelligence specialists’ located in-country turned up evidence that a business relationship existed between the Middle Eastern company and a senior government official. The research and on-the-ground inquiries conducted through high level sources provided insight into the business relationship between the Middle Eastern company and the government official. Aided with the intelligence research analysts and the managing director were successful in obtaining documentation the business relationship existed between the parties. The banking institution passed on the deal and terminated any further negotiations.